On 5 October 2015, The Central Bank of Ireland (the "Central Bank") issued a statutory instrument that will form the basis for a new Irish regulatory framework for UCITS.
The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015 (the "CB UCITS Regulations") shall replace the long established UCITS Notices which, along with the accompanying Central Bank Guidance Notes, will now fall away.
The CB UCITS Regulations will complement the main Irish regulations that implement the UCITS Directive (the UCITS Regulations1). Both regulations will be supplemented by supporting regulatory guidance and Q&As (to be published by the Central Bank on specific UCITS issues in due course) and make up the complete UCITS regulatory framework.
This effectively marks a full overhaul of the regulatory rules for Irish UCITS.
Promoter Requirement Removed
While the main objective of this exercise was to simply recast the regulatory rules and put them on a statutory basis, the wide scale scope of the review and the long standing nature of the existing rules and guidance means that, inevitably, certain policy matters have been caught in the review and changed accordingly.
One of the most notable developments is the removal of the requirement for each UCITS to have a fund sponsor or "promoter" approved for such purposes by the Central Bank.
The Central Bank will therefore no longer scrutinise the regulatory status, financial resources and ownership structure of the entity that sponsors the UCITS. The management company (if any) and the service providers of the UCITS will still need to be regulated or cleared by the Central Bank to assume such functions.
This is a welcome development, particularly for fund managers considering establishing Irish UCITS. Going forward, fund sponsors can avoid what was, in some cases, a significant administrative hurdle to entering the market. This paves the way for more new managers to set up Irish UCITS structures.
Other Key Points to Note
We have highlighted a few of the other notable changes below:
Eligible markets to be assessed by UCITS themselves
Previously the Central Bank set out prescriptive criteria in order to determine whether markets were eligible for UCITS investment. This guidance falls away with the consequence that UCITS themselves are now in a position to assess the markets they wish to invest in and determine if they...